The circular economy is disrupting the lithium-ion recycling industry

In a new report from Circular Energy Storage on circular opportunities in the lithium-industry we came to conclusions that surprised even ourselves: Contrary to what many people believe, lithium-ion batteries are becoming circular. More than any other battery types lithium-ion batteries are reused, re-purposed and recycled into new batteries.

It just doesn’t happen Europe or North America.

It happens in China. Here two thirds of the world’s cathode, anode and electrolyte production is found. It’s the manufacturers of these components that buy the recycled materials and turn it into new products. Moreover, as much as 50 per cent of the world’s portable lithium-ion batteries end up in China. These batteries normally contain almost 20 percent cobalt and represent over 80 per cent of all lithium-ion batteries that reach end-of-life this year. This gives Chinese recyclers excellent prerequisites for developing and scaling efficient recycling processes. Already today recyclers in China produce synthesized cathodes with recycled lithium and cobalt.

Still this is not why batteries are exported from Europe and North America. They do that because the reuse value is far greater than the recycling value. And as the reuse industry is dominated by China, that’s where the batteries go.

From a circular economy standpoint this is essentially ideal. The batteries are not wasted until they are completely used up and when they finally are, they are efficiently recycled and the material is reused.

But for recyclers in Europe and North America it’s a disaster. Recyclers need large volumes of batteries with recoverable and valuable materials. Currently they have neither. And there is really not much that points to a change. Even if end-of-life batteries from electric vehicles the next 8 years will grow with 150 percent per year they will still represent only 10 per cent of the portable batteries in 5 years from now. And the amount of cobalt in these batteries, the most valuable mineral in a lithium-ion battery, is far from the high amount found in the electronics batteries, especially in vehicles placed on the market before 2017. This makes it hard to achieve profitability from the actual recycling operation but requires a gate fee for accepting the batteries. Making European and American recyclers to an even less attractive option.

Besides recyclers this is also a problem for Europe and North America as regions. While we talk about securing critical raw materials we continue to send it away.

The solution to this, for recyclers and for governments wanting to secure jobs and raw materials, is to embrace reuse. Because as long as somebody else is paying more for the batteries, that’s where the batteries will go. With proper testing and grading of batteries locally, the batteries that are not fit for reuse will also be recycled locally. And with control over the reused products it will be easier to get them back when they are finally dead.

With batteries remaining in the country or region they first were used, the conditions improve not only for recyclers. It also provides opportunities for local battery makers to secure raw material which basically is disconnected from the open commodity market. Which in fact is essential. Because if we want to create a real circle, it must be someone there to close it.